NATURAL CATASTROPHE YEAR IN REVIEW 2015portal.jlt.com.tr/upload/files/2015 Natural Catastrophe...In a 2015 mid-year report, Munich Re estimated insured property industry losses at

CATASTROPHE ANALYTICS & SERVICES

NATURAL CATASTROPHE YEAR IN REVIEW 2015

NATURAL CATASTROPHE YEAR IN REVIEW 2015 | CATASTROPHE ANALYTICS & SERVICES 3

CONTENTS

2015-16 RECORD SETTING EL NIÑO

2015 ATLANTIC HURRICANE SEASON

2014-15 WINTER

2015 U.S. WILDFIRE

2015 EARTHQUAKE BRIEF

DECEMBER 2015 UK FLOOD AND WINDSTORM

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4 NATURAL CATASTROPHE YEAR IN REVIEW 2015 | CATASTROPHE ANALYTICS & SERVICES

2015-16 RECORD SETTING EL NIÑO

The climate story of 2015-16 is the record setting El Niño. Characterized by anomalously warm sea-surface temperatures in the Central and Eastern Pacific, this year’s event eclipsed the previous record event from 1997-1998. Far reaching effects across the globe result in meaningful implications for the property insurance industry.

El Niño is the warm phase of the El Niño Southern Oscillation (ENSO) where the warmest ocean temperatures across the globe, situated in the Maritime Continent, shift east due to a weakening in the trade winds. Figure 1 shows the comparison between the 1997 El Niño event to this year, highlighting the peak warmth in the Eastern Pacific in addition to even more broad oceanic warmth across the basin.

Figure 1: The expanse of anomalous warmth in SSTs across the Pacific Basin is evident in 2015 compared to the last major El Niño event in 1997. (Source: NASA)


WARMEST YEAR ON RECORDDue to the eastward extension of warmer-than-average SSTs into the Central/Eastern Pacific, El Niño years historically result in exceptional warmth globally. Since 1950, seven of the nine moderate to strong El Niño events have resulted in new records for highest average annual global temperature. This 2015-16 El Niño is no different as global temperatures broke the prior warmest year on record by a healthy margin.

HURRICANE SEASON IMPACTSEl Niño events have been well-documented for suppressing Atlantic Basin hurricane activity while boosting tropical cyclone activity in the Eastern/Central Pacific. The 2015 Atlantic hurricane season marked the second consecutive year of normal to below-normal observed activity (this is discussed further in the Atlantic hurricane season review section). On the other hand, the Eastern Pacific Basin broke multiple records including spawning the strongest hurricane on record in the Western Hemisphere (Hurricane Patricia – 200 mph maximum sustained winds). Major hurricane activity on a global basis in 2015 was higher than any other year dating back to 1970.

Figure 2: Average global temperature anomalies in 2015 show just how much warmer this past year has been relative to the five previous warmest years on record. (Source: Climate Central)

Figure 3: Hurricane Patricia became the strongest hurricane on record in the Western Hemisphere. (Source: International Space Station)

While Hurricane Patricia broke the all-time hurricane wind speed record in the Western Hemisphere, the minimum central pressure reading of 879 mb was still short of the lowest pressure recorded globally of 870 mb. Super Typhoon Tip holds this record when the super typhoon tracked through the Western Pacific in October 1979.


REGIONAL IMPACTS – NORTH AMERICAEl Niño winters tend to lower the prospect of bitter and damaging cold across the Northern U.S., a marked change from the past two winters. An active subtropical jet stream enhances moisture prospects across much of the Southern U.S., including drought-stricken California. Additionally, recent research indicates El Niño winters increase severe thunderstorm activity the following spring along the Gulf Coast and Florida while suppressing activity in the Central Plains. With regards to the western U.S. drought, El Niño is unlikely to fully eradicate the excessive dryness. However, an above-normal rainy season favors improvement in drought conditions most notably in the Southwestern region. In the Pacific Northwest, the excessive rainfall and flooding seen in the last months of 2015 has been an interesting deviation from the drier than normal winters traditionally seen in El Niño.

REGIONAL IMPACTS – PACIFIC RIMEl Niño conditions most greatly impact areas closest in proximity to the equatorial Pacific Basin. Figure 4 highlights the temperature/precipitation impacts for Central and South America, while Figure 5 highlights the dramatic influences El Niño has on Australia.

Figure 4: Infographic highlights the impact of El Niño conditions in Central and South America. (Source: United Nations Environment Programme)

Figure 5: Infographic highlights the impact of El Niño

conditions in Australia. (Source: Australia Bureau of Meteorology)


MORE ACTIVE THAN ANTICIPATED, YET THE MAJOR HURRICANE U.S. LANDFALL DROUGHT CONTINUESOne of the stronger correlations in weather and climate, known and studied by the insurance industry, is the reduction in Atlantic hurricane activity associated with an El Niño. The reduction in Atlantic activity results from high wind shear across the tropical Atlantic and Caribbean. 2015 featured one the strongest late summer El Niño events on record with extremely high wind shear across the Caribbean.

Yet, the 2015 Atlantic Basin hurricane season featured normal to only slightly below average activity, depending on the method utilized to measure the season. Several factors played into the somewhat surprising result:

• Exceptional wind shear was confined to the Caribbean rather than extending eastward through the tropical Atlantic. This shear was generally restricted to the western part of the basin.

• As a result, several tropical storms formed off the coast of Africa, including Hurricane Fred becoming the first landfalling hurricane across the Cape Verde Islands in over a century.

• Anomalously and near record warm ocean temperatures in the Atlantic extended far into the Northern Atlantic resulting in Hurricanes Joaquin and Kate (Figure 6).

Figure 6: Sea Surface Temperature anomalies during the peak of the Atlantic hurricane season show extremely warm waters extending far north in the Atlantic. (Source: NOAA)

2015 ATLANTIC HURRICANE SEASON


10TH CONSECUTIVE YEAR WITHOUT A MAJOR U.S. LANDFALLING HURRICANEWith no major U.S. landfalling hurricanes this year, 2015 marked the 10th consecutive year without one. In records going back to 1851, the U.S. has never had a ten-year period without a major hurricane landfall. A study published in Nature by Timothy Hall (NASA Goddard) and Kelly Hereid (ACE Tempest Re) provides context for the current hurricane drought. Their study determined the return period of a 10-year drought in major landfalling hurricane activity (Category 3 or higher, portrayed by the green line in Figure 7) to be roughly 300 years. Hall and Hereid generated 63,000 years of simulated hurricane activity to derive return periods of landfalling hurricane droughts by Saffir Simpson category.

EARLY INDICATIONS FOR THE 2016 SEASON?What does the ongoing major hurricane drought tell us about landfall prospects of a major hurricane next year? The answer is not much! Tropical cyclone scientists largely agree that one hurricane season is independent from another. Put another way, major hurricane landfalls in the U.S. are a random process and there is no established relationship from one season to the next. An analysis of long-term hurricane landfall statistics reveal the annual probability of a major hurricane making U.S. landfall is approximately 40%.

Figure 7: The average waiting time for consecutive years with no U.S. hurricane landfall by intensity. (Source: Hall & Hereid 2015)

El Niño winters provide little information about the following Atlantic hurricane season. Following the two largest El Niño events of the 20th century, the 1983 hurricane season featured 17% of normal activity. Conversely, the 1998 season was exceptionally active with 182% the long term average. The timing of El Niño’s demise in the spring or summer is the major driver of the variability as a spring end promotes more active conditions while El Niños that linger into summer suppress activity.


IMPRESSIVE COLD FOR THE EASTERN U.S.The winter of 2014-15 can be characterized by impressive cold and snowy conditions in the eastern half of the country, particularly in the Northeast, and conversely, above normal temperatures in the western half of the country. In a 2015 mid-year report, Munich Re estimated insured property industry losses at $3.2B for the winter, which included losses from snow, ice, freeze, and related hazards. A persistent cold and snowy pattern developed in early January and continued relentlessly until the beginning of March in the eastern half of North America. The most extreme cold in the majority of the Eastern U.S. transpired in the middle of February. Statewide average temperatures (Figure 8) show how marked these cold temperatures were. February 20th marked the coldest day since January 16, 1994 across much of the eastern half of the nation.

Figure 8: Average temperature ranks by state showing the dichotomy between eastern and western states. (Source: National Climatic Data Center)

WINTER 2014-15

The winter of 2014-15 shattered records that go back more than a century. Impressively, in many Eastern U.S. cities, February 2015 is now the all-time coldest month since records began. Several cities also recorded the coldest February in decades; for some, even more than a century. Statistics compiled by the National Climatic Data Center highlighting the impressive intensity of the February cold are shown in Figure 9.


RECORD SNOWFALLS IN MAJOR METRO AREASRecord cold in the Northeast was coupled with heavy precipitation. Throughout the region, insurers suffered losses as a result of ice damming and snow-load related building collapse during this historic winter. Many New England cities broke or nearly-broke their all-time snowfall totals. Boston, MA recorded a record snowfall total of 110.3 inches. While the snowiest winter in Boston on record is impressive, the 92.4 inches that fell in the 30-day period spanning January 24 to February 22 crushed the prior 30-day snowfall total of 59 inches from the infamous winter of 1977-78. A computer simulation study conducted by MIT concluded that only 11 winters in a million would feature more snowfall in a 30 day period than took place in Boston during the winter of 2015. Many other locations in coastal New England experienced similar record precipitation including portions of Maine, New Hampshire, and Connecticut. While New England made many headlines, Buffalo, NY set the tone for things to come in November 2014 when an early lake effect snow event produced over 70 inches with snowfall rates in the peak of the storm approaching 6 inches per hour.

RECORD WINTER WARMTH AND DROUGHT IN WESTERN U.S.In the Western U.S., the winter of 2014-15 was an entirely different story. A persistent high pressure ridge stalled over the Eastern Pacific encompassing much of western North America. The ridge shifted the Pacific storm track north of California further exacerbating the already drought-stricken area. Moreover, mountain regions across much of the Intermountain West experienced very low to record low snowfall. The corridor of dryness can be seen in Figure 10 along with the record warmth previously highlighted in Figure 8. Figure 10: Percent of normal snowfall winter 2014-15.

(Source: Brian Brettschneider, University of Alaska)

Figure 9: City temperature records established winter 2015. (Source: National Climatic Data Center)

The jet stream pattern promoting the extremes across the continental U.S. also served to delay the onset of the severe convective storm season across the central U.S. While April and May rebounded once the grips of winter lessened in the eastern half of the country, overall tornado, hail and straight line wind activity for 2015 was below the 10-year average for the 4th straight year.


In 2015, 10.1M acres burned by wildfire was the highest on record, exceeding the prior record of 9.9M in 2006. While acreage set a new threshold exceeding 10.0M acres, 68,151 fires was below the 10-year average of 73,138 fires according to the National Interagency Fire Center (NIFC). Hence, 2015 was characterized by larger fires than average.

The season got off to a fast start, with fires igniting across vast portions of Alaska in the spring, where three enormous fires burned more than 300,000 acres each. The drought-stricken Pacific Northwest experienced a prolific early-summer fire season, while some of the most economically impactful fires followed in the mid to late-summer in populated areas of California. PCS estimates that the Valley and Butte fires together resulted in an insurance payment of $1.23B, due to the destruction of more than 2,800 structures, including multi-family dwellings and commercial properties.

The drought, which encompassed much of the Western U.S. going into the spring of 2015, set the stage for what was expected to be an above-average wildfire season. Snowfall in the Sierra and Cascade Ranges was well below average during the winter of 2014-15, and reservoir storage was at a mere 46% of capacity in California going into summer. Upwards of 75% of the Western U.S. region was characterized as being in some stage of drought as of May 5th, 2015, of which over 7.5% was characterized as extreme drought. The official wildland fire forecast, issued by the National Interagency Coordination Center, recognized this enhanced risk, and indicated an above-normal wildland fire potential for most of California, Oregon, Washington, Idaho and Alaska for the spring and summer months of 2015. While the fire season was devastating, it was also well forecast.

Figure 11: The number of fires and acres burned each year going back to 2005. (Source: National Interagency Fire Center)

2015 U.S. WILDFIRE

The 10.1M acres burned in the U.S. in 2015 is a new record, encompassing 15,000 square miles, which equates to an area a little larger than the state of Maryland. Australia is another country witnessing record hot temperatures in 2015 along with excessive drought conditions. Particularly in the midst of El Niño and Indian Ocean sea surface temperature conditions, Australia is expecting abnormally active fire conditions this boreal summer. Historically, annual fire activity in Australia ranges between 3%-10% of the total land area of the country (equivalent to the area of the U.S. states of Georgia to Texas).


Figure 12: The U.S. Drought Monitor for the Western U.S. as of May 5th, 2015. (Source: National Drought Mitigation Center)

Wildfires are increasingly becoming larger and more expensive. According to PCS, over the 20 year period from 1995-2014, wildfires accounted for 1.5% of insured losses in the United States and totaled more than $6B in damages ($300M on average each year). Compare those statistics to the $1.2B in damages caused by the two largest fires of 2015, and one can see how devastating this year has been. This year the U.S. Forest Service spent 52% of its total budget on wildfire related costs, relative to just 16% in 1995. With the dramatic expansion in budget also comes cooperation. The U.S. and Australia recently entered into an agreement where either country can request resources to help fight fires in either region including personnel and equipment (see inset for further information).

Wildfire is an increasingly urban threat, as people continue to migrate and populate vulnerable areas adjacent to cities, particularly in the Western U.S. These areas are frequently subject to drought conditions and also contain large tracts of forested area that are susceptible to wildfire. A recent study by the Department of the Interior suggests that 90% of wildfires are caused by humans (the remaining 10% by lightning and lava). As people continue to move into forested areas prone to drought, the risk of fire ignition increases, and the economic and insured losses related to these fires in populated areas will continue to grow.

Figure 13: This figure indicates the overall U.S. Forest Service Budget (pink), as compared to all wildfire-related budget costs (yellow), and wildfire suppression costs (orange) in 2015, and by contrast 1995. (Source: U.S. Forest Service)


LOOKING AHEADGenerally speaking, little potential for significant fires exists during the winter and early spring period for the entirety of the United States. Typically, fire activity would be occurring in the Southeastern U.S. this time of year; however, El Niño conditions have brought significant moisture to the southern states and have reduced fire potential to below-normal in these areas. While there was some concern regarding fires in Southern California due to the powerful Santa Ana Winds to start of winter, wetter conditions associated with El Niño have developed as expected in December 2015 reducing the fire potential through the rest of winter.

Figure 14: The significant wildland fire potential outlook for Spring 2016. (Source: NIFC)


This year, two damaging earthquakes provide compelling case studies of contrasting outcomes: the April 25th and May 12th Nepal Earthquake & Aftershock and the September 16th Illapel, Coquimbo, Chile Earthquake. More than 9,000 people died from earthquakes in 2015, mostly from the large shocks experienced in Nepal. An encouraging outcome from both events was more evidence that retrofitted buildings and critical facilities suffered little damage and were operational soon after the earthquakes. This year did not see a large amount of insurance claims as a result of earthquakes, but there was much to learn from Nepal and Chile that will help to prevent significant loss of life and property in future events.

Metric Illapel, Chile Earthquake & Tsunami Nepal Earthquake & Aftershock

Earthquake Magnitude

Mw 8.3 Mw 7.8 & Mw 7.3

Maximum Observed MMI

VIII (severe) IX (violent)

USGS Pager System Alert

900,000 people exposed to very strong or greater shaking

6,000,000 people exposed to very strong or greater shaking

Fatalities < 15 people 8,000+

Secondary Hazards Tsunami maximum: 15.6 ft (4.75m), waves limited to Chilean coastline; 1M people evacuated; rock slides in epicentral region

Slope failures (landslides) due to steep terrain; large ground movements

Unique Characteristics

Frequent large earthquakes experience, stringent building codes

750 monuments damaged, more than half collapsed; USD $200M in damage to cultural heritage sites

2015 EARTHQUAKE BRIEF


Figure 15: First seismically retrofitted school in Nepal performed well against the earthquakes in April and May. (Source: EERI)

Figure 16: Typical damage to monuments (at left) and private buildings (at right) from the 2015 earthquakes. At right, slope failure and building structural failures can be observed. (Source: EERI)

Strong earthquakes struck Nepal on April 25th and May 12th of this year. The National Planning Council of Nepal estimated more than 510,000 buildings suffered complete damage and 295,000 were partially damaged. Much of the building stock in Nepal is not adequately resistant to seismic forces, and private buildings are mostly non-engineered. Much of the structural failures observed were attributed to geometric irregularities, soft-stories, poor or non-seismic detailing, poor construction techniques, and lack of building code enforcement. Retrofitted buildings in Nepal, primarily health care facilities and schools, performed much better than private buildings. Re-building efforts were lacking (i.e., using rubble, same building techniques) as the approaching monsoon season was the immediate threat for the region.


Figure 17: Tsunami wave heights from Illapel, Chile Earthquake. (Source: NOAA)

Figure 18: Tsunami damage observed in the city of Coquimbo, Chile following the September 16th Earthquake & Tsunami.(Source: Associated Press)

Figure 19: Severe earthquake damage observed in Illapel, Chile in most vulnerable building types: unreinforced masonry and adobe. (Source: Reuters)

At 19:54 local time on September 16th, an Mw 8.3 earthquake struck off the coast of Coquimbo, Chile and was quickly followed by an aftershock of Mw 7.0 less than half an hour later. The last damaging earthquake to severely affect the same region of Chile occurred in 1985. Though the magnitude of the 2015 event is larger than the 1985 event (Mw 7.9), improved building practices, experience with large earthquakes, and location of the 2015 rupture prevented widespread damage in highly populated areas of Chile. Severe ground shaking intensities were concentrated mainly around the city of Coquimbo, missing the larger cities of Valparaíso, Viña del Mar, and the capital Santiago to the south. Insured losses from such a large earthquake are expected to be relatively low.


DECEMBER 2015 UK FLOODS AND WINDSTORMS

Three separate December windstorms brought record-breaking rains and strong winds to the UK, resulting in extensive flooding across the country. More than 10,000 homes and businesses have been flooded in parts of Northern England, Scotland, and Wales. Thousands of people have been evacuated as full streets became submerged under rising floodwaters. As many as 100,000 homes have been left without power for some part of December. In some areas, such as Cumbria, saturated ground and already swollen rivers have caused parts to be submerged three times in the month of December. The economic cost of the December storms and flooding has been estimated to be £1.3B by the Association of British Insurers.

The UK Met Office has declared December 2015 the wettest month on record, breaking the previous record set back in 1910. Three major windstorms hit the UK and Ireland in succession during the month of December, all contributing to the record precipitation. In early December, Windstorm Desmond broke rainfall records across the UK and caused widespread flooding. These flooding conditions were further exacerbated when Windstorm Eva followed three weeks later, with Windstorm Frank following just days later. Precipitation totals throughout the UK are more than 150% greater than typically observed during December. Wales and Scotland have both recorded more than 13.5 inches (350 mm) of rainfall in December, an astounding 200% deviation from normal.

Figure 20: Widespread Flooding in York, UK led to the evacuation of hundreds. ( Source: Glen Minikin, SWNS)


Figure 21: December 2015 precipitation totals for the UK and Ireland show anomalous rainfall deviations from mean as a result of Windstorms Desmond, Eva, and Frank. (Met Office)

The Cumbria region of the UK is unfortunately no stranger to severe flooding. Six years prior, in November 2009, this region endured what at the time was proclaimed a once in 800 year flooding event. The culprit in both the 2009 and 2015 floods in the UK were atmospheric rivers. Narrow ribbons of moisture plumes that extend from the tropics into the mid-latitudes, the vast majority of atmospheric rivers result in beneficial rain and snow to many land areas of the Northern Hemisphere. In the Cumbria floods, clustering of storm systems brought repeated and anomalously strong moisture plumes to the UK, overwhelming flood defenses with excessive rainfall.

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NATURAL CATASTROPHE YEAR IN REVIEW 2015portal.jlt.com.tr/upload/files/2015 Natural Catastrophe...In a 2015 mid-year report, Munich Re estimated insured property industry losses at